Customers today expect a seamless omni-channel shopping experience with directly integrated payment options. Recently technical progress and the tokenisation of retail payment transactions have enabled omni-channel use cases. In this article we explain how omni-channel payments work in practice and how merchants and corporates are able to benefit from this modern payment solution.

Automatic Tokenisation and Omni-Channel Payments

Modern payments solutions tokenise all transactions to reuse the processed information in future transactions, whether through the same sales channel or others.

Tokenisation describes the encrypting process by which unique identifier replacement numbers are assigned to transactions. If a payment system recognises a token, it decrypts it using the right decryption key to process the data.

Use case 1: A customer buys a product (or service) in a store and pays by card. The payments system tokenizes the transaction based on the transaction reference number. If the customer is not satisfied with the product, returns it a few days later and wants a refund, the merchant or corporate can simply trigger the refund payment to the customer at the push of a button after entering the token. The payments system recognizes the encrypted token and the underlying transaction data.

Use Case 2, click & reserve: A customer selects a product online, triggering a reservation. The customer is satisfied with the look and feel of the product and pays for it in-store. The payment system recognises the underlying transaction data assigned to the token created during the online selection and uses it automatically to process the payment.

Other relevant omni-channel use cases for merchants and corporates include 'queue busting', click & collect', 'buy instore & pay at home', 'instore e-commerce' and 'endless aisle'.

As omni-channel use cases rise, corporates and merchants are bound to implement them. Retail payments today are customer-centric and require a modern payments solution.

Due to the seamlessly integrated payment functions within the different distribution/sales channels, retailers and corporates hardly miss out on any sales as their customers have the freedom to shop across channels and to choose how to pay. Additionally, purchase cancellations and time-consuming manual refunds can be avoided.

Automation of accounting and reconciliation to reduce manual processes

Modern retail payments solutions enable merchants and corporates to further automate accounting and reconciliation. This has the following benefits for merchants and corporates:

• reduced manual effort
• reduced sources of error
• cost savings
• more time for fundamental business activities.

If modern retail payments solutions are used, all transactions are automatically tokenised. This ensures that omni-channel transactions are consistently correctly flagged and recognised at all times in the reconciliation process and booked directly in the accounting system if they match.

This means significantly less manual search and correction effort for the parties involved, resulting in direct cost savings. Today, some payment providers and acquirers include automated reconciliation solutions to integrate added value.

From simple terminal to future-proof multitalented smart POS device

'All in one' or 'one device strategy' are increasingly important for merchants with physical points of sale (POS).

Simple terminals to accept cashless payments are being replaced by a new generation of android-based smart devices. These devices enable value added services and deliver an enriched in-store customer experience.

Using modern smart POS devices to accept cashless payments in stores offers the following advantages for merchants and corporates:

real-time software updates through cloud integration. The days when a terminal had to be returned to the payments provider for a software update are over. Thanks to integration, payment providers are always able to automatically provide merchants with the latest terminal software. New features can continuously be added and the internationally valid PCI DSS security certification covers all the security aspects of smart POS devices.

manage Smart POS devices yourself.

Thanks to the Android-based operating system, merchants can manage their smart POS devices themselves and activate and/or change new payment methods, FX currency conversion and other functions, and much more.

use additional applications on the smart POS device, simply.

Additional connectivity to applications such as the POS system for cashing, the warehouse system for querying inventories or the customer relationship management (CRM) system for viewing customer data can be conveniently activated on the smart POS device. This works via an app store, where the corresponding apps can be downloaded to the smart POS device and linked to the main system for use, turning the smart POS device into a mobile control centre and giving the merchant further flexibility.

new instore shopping experience.

Smart POS devices enable a wide range of new use cases, from self-service to close interaction with sellers, Web in-store, Gamification and others.

And now?

The entire retail payments infrastructure is being transformed, creating a multitude of new opportunities to offer cashless payment solutions in the future.

Merchants and corporates are advised to upgrade their payments infrastructure to benefit from optimised operations and reduced manual effort, resulting in overall cost reductions.

Due to the growth in retail payments, the cost structure for merchants has become more important than before. This is therefore the best time for merchants to consider the future Interchange++ cost structure of retail payments.

Read our previous retail payments transformation blog here

Sergio Cruz, Partner, Consulting

Sergio is the lead Partner of Deloitte’s Business Operations practice in Zurich and has more than 25 year of experience in Consulting. He focuses on large scale front-to-back digitalisation programs in financial services and has worked on several large assignments both in Switzerland and abroad, covering the implementation of regulatory requirements and the definition as well as implementation of target operating models and process optimisations.

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David Frei, Director, Consulting

David is Deloitte Switzerland’s Payments Lead and a Director in the Business Operations Consulting practice in Zurich, with global experience gained in Consultancy and the Banking industry. He has vast experience and a macro view across retail and banking payments, financial service products, consumer, payments costs, regulations and systems as well as detailed knowledge of key processes in Acquiring, PSP and omni-channel/e-commerce payments. He has advised large clients through impactful payments transformation and digital payments projects in Switzerland and Europe.

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Leonel Carlen, Business Operations Consultant

Leonel is a Consultant within the Business Operations team at Deloitte Switzerland with a broad educational background ranging from machine learning and statistics to engineering and management complemented by research in a variety of fields. His professional experience includes product management at a leading global technology company and business development in start-ups. He enjoyed experiencing both, the technical and the business sides of a company which gives him two different, yet complementary, perspectives to successfully perform business operation transformations.

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Andres Eggimann, Business Operations Consultant

Andres is part of the banking transformation team at Deloitte Consulting in Zurich. He focuses on payment strategies and the retail and wealth management sector. He is eager to support clients to close the gap between a bank’s payment capabilities, the growing fintech ecosystem, and ever-evolving customer expectations around payments.

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